OneText - SMScommerce

Company & Team Introduction

OneText offers businesses a platform to create powerful SMS (Short Message Service) campaigns with frictionless payments. The company was founded by 2 veterans of the payments industry, ex-PayPal employees Jonathan Fudem @jfudem (CEO) and Daniel Brain @bluepnume. The duo had the vision to make purchasing through SMS as seamless of an experience as purchasing items from a hotel where your card is on file and you can charge everything to your room number. OneText has seen strong early traction as companies experience incredible results and the power of frictionless selling through SMS. OneText’s team is currently ~6 people and is headquartered in San Francisco, California.

Product Overview

OneText’s product is incredibly unique, they turn each customer’s phone number into a card on file. When customers make their first purchase through OneText they enter their credit card credentials. After entering your information the first time, OneText then saves your credentials allowing customers to purchase SMS offers with one single click, straight from a text conversation. No friction or link to your website that customers must click to submit the card information for the 6th time. Their platform also provides other powerful SMS marketing campaign capabilities and automations such as periodically setting repeat offers to customers. OneText also easily integrates with fan favourite e-commerce tools such as Shopify and Klaviyo.

Total Addressable Market

SMS marketing is an already massive and growing market. It was estimated to be 8.22B in 2022 undergoing rapid growth through 2030, growing to upwards of 38.44B with a CAGR of 21.26% in the period. Many brands also drive 20%+ of their sales through SMS but the current state of transactions through SMS is also riddled with friction; clicking links, switching to browsers, loading webpages, and entering card information time and time again. Could this frictionless commerce system expand the TAM? Early testimonials point to much higher conversion rates than previous SMS strategies and if they create a more effective method to convert sales through text message businesses will follow in droves.

Business Model & The Numbers

OneText utilizes a 3-tier SaaS + revenue share business model with the following pricing:
Starter (first-month trial)
SaaS pricing: Free
Rev share: 7%
SMS fees: $0.013/segment + carrier fees
Pro
SaaS pricing: $150/month
Rev share: 3.5%
SMS fees: $0.008/segment + carrier fees
Volume
SaaS pricing: $300/month
Rev share: 2%
SMS fees: $0.007/segment + carrier fees
*Carrier fees typically range from $0.00275/message
*Message segment = 160-character text message

OneText generated ~$600,000 in payment volume in March 2023. Leading up to April the company estimated they would produce $50,000 in revenue for the month. The company offers a free month trial to help remove barriers for their merchants to reach the time-to-value “aha” product moment. Also, SMS as an industry also enjoys extremely high open rates, upwards of ~98% in comparison to email marketing for example with a respectable open rate starting around 30-40%.

Traction

OneText has enjoyed strong traction since its founding in 2021, onboarding over 50 fast-growing e-commerce brands and helping them achieve up to a 16% increase in their revenue with text-to-buy. The Chief Marketing Officer of their largest customer, a 90M clothing brand says that OneText is “the best thing that has happened to SMS marketing since forever” and has been revolutionary to their marketing.

Competitors

OneText faces some strong competition from much larger and more established businesses than the new startup. It will be an uphill battle for the company as they lack the resources of incumbents in the space but Onetext’s differentiated product offering will position them nicely among the SMS industry. A few of OneText’s main competitors to look out for are:

Attentive: A leading SMS platform founded in 2016 by Brian Long. Attentive had 200M+ revenue in 2022 growing 60% YoY and was last valued at 6.9B.

Postscript: A smaller but faster-growing SMS competitor. Postscript still has a sizeable revenue base of 39M in 2022 growing 77% YoY. The company was started in 2018 by Adam Turner.

Deal Terms

OneText most recently raised a seed round in June 2023. The company was also a participant in YCombinator’s Winter 2023 batch of startups in which they raised 500K from YC via a SAFE.